How to fix the UK economy.

lostinrates

Degenerate wrote: »

Are you talking about fixing the economy, or fixing the fiscal deficit?

I dsuppose the deficit, you are absolutely right, but once our finances are healthier we'll look better investment, we''ll be, oh joy, ripe for more debt, and we'll have a healthier attitude to it all as a society . It seems that a lot of the economy was built on debt.

Degenerate

lostinrates wrote: »

I dsuppose the deficit, you are right, but once our finances are healthier we'll look better investment, we''ll be, oh joy, ripe for more debt, and we'll have a healthier attitude to it all as a society

True, but if you tighen too soon you damage the economy further, which causes tax revenues to drop further, so perversely can wipe out the fiscal gain or even make the deficit worse.

lostinrates

Degenerate wrote: »

True, but if you tighen too soon you damage the economy further, which causes tax revenues to drop further, so perversely can wipe out the fiscal gain or even make the deficit worse.

I accept this

Thrugelmir

bluey890 wrote: »

Any suggestions?

Collectively accept that we are in the mire and work as a nation to rebuild wealth. As long as there's an attitude of make as much as one can at the expense of others. Then we will continue to struggle. Cut the red tape and allow entreprenuers to flourish. House wealth is in a sense illusory. So regulate house purchase in a form that it is beneficial to own ones home in the long term but does not make buying and selling a complete gamble.

Politics needs a sea change. The old party lines are blurred and meaningless. We live and work in a global market place and need to have a fresh approach to basically everything.

tomterm8

My prescription over the long term is the medicine is clear and obvious. People need to spend less. They need to save more. We need to produce real wealth, and you only do that by spending less than you produce. The idea that the household savings rate can fall to negative, and that is sustainable is rediculous. The savings rate needs to reach over 8% and stay there, permanently.

The problem is, while these policies are the best for the long term, in the short term if we try to carry them out too quickly we will head for a depression. That's what latvia is doing, and last quarter they had something like 16% annualised contraction. So, we need the government to behave to an extent in a fiscally irresposible manor for a period of time by borrowing more than is sustainable if the trend were to continue in the long term.

Over the next decade, it will need to be paid back. That means higher tax, cuts in public spending, and a decade of moderate pain. But trying to sort out the fiscal deficit over too short a period is likely to lead us into a recession that is very prolonged and cause great social unrest.